Ontario should scrap arbitrary and opaque density bonusing deals between municipalities and developers, the system under which zoning rules are broken in exchange for public amenities.

In my report for the C.D. Howe Institute I outline how the practice is all too often opaque and is based on weak rationales for its use.

While under Section 37 of Ontario’s Planning Act, municipalities can implement density bonusing, the Act contains no guidelines on how city councillors should employ this tool. As a result, density bonusing agreements are usually negotiated on an ad hoc basis behind closed doors, leading to a lack of coordination in determining what benefits to secure from developers. In the absence of provincial guidelines, municipalities have interpreted and implemented section 37 as they see fit. This is no small matter. In Toronto, there was roughly $200 million in unallocated Section 37 money in 2016.

The fact that municipalities were implementing density bonusing without sanction from the provincial government also might explain the very ad hoc nature of the process. Until the early 2000s, Canadian courts, following the decision in Ottawa Electric Light Co. v. Corporation of Ottawa (1906), were quick to rule as ultra vires any municipal decision that did not fall under its authority as explicitly stated in provincial legislation. Given the courts’ stance, it is not surprising that municipalities would avoid implementing a more transparent and structured process for density bonusing.

The province could quickly solve Ontario cities’ dilemma by explicitly allowing for a broad-based formula for the implementation of density bonusing, as British Columbia has done. The bigger issue, however, is that the arguments in favour of density bonusing are defective on a number of grounds, ultimately resulting in a highly flawed planning tool, regardless of its legal underpinning. First, when municipalities rely on density increases to justify securing benefits from developers, they are maligning density. For residents opposed to high-rise infill developments in their neighbourhoods, this might seem fair; however, although density can result in negative externalities, such as congestion, it also combats sprawl and typically leads to efficiencies in service delivery. As a tax can lead to suboptimal distribution of goods and services, so too can density bonusing unintentionally affect development. Second, there is no explicit rationale for the use of density bonusing in Ontario.

In the light of Ontario’s drive to address the flaws in its planning regime, it should at a minimum rewrite the legislation governing density bonusing to ensure a more transparent process. Alternatively, the province could repeal section 37 altogether.

The deals often result in amenities that do not address the neighbourhood’s concerns about density or transit capacity. Examples include the Scarborough Walk of Fame, and, albeit aborted, the world’s tallest flag pole in Emery Village.

None of the traditional rationales behind density bonusing provides an adequate argument for its use in place of other, fairer and more transparent planning tools without the level of complexity inherent in density bonusing.

The province of Ontario, and other jurisdictions in Canada, should consider tools that achieve more useful and equitable outcomes in place of density bonusing.

Aaron Moore, is Associate Professor, Department of Political Science, University of Winnipeg; Fellow, Institute on Municipal Finance and Governance, University of Toronto; and Adjunct Professor, Department of City Planning, University of Manitoba.